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DM Arbor Court, Ltd. v. City of Houston

United States District Court, S.D. Texas, Houston Division

September 22, 2019

DM Arbor Court, Ltd., Plaintiff,
v.
The City of Houston, Defendant.

          MEMORANDUM OPINION & ORDER

          GRAY H. MILLER, SENIOR UNITED STATES DISTRICT JUDGE

         Pending before the court is defendant City of Houston’s (“the City”) motion to dismiss (Dkt. 26) plaintiff DM Arbor Court, Ltd.’s (“Arbor Court”) second amended complaint (Dkt. 22) under Rule 12(b)(1) for lack of jurisdiction and Rule 12(b)(6) for failure to state a claim, Arbor Court’s response in opposition (Dkt. 31), and the City’s reply (Dkt. 34). Also pending is Arbor Court’s motion for leave to file third amended complaint (Dkt. 61) (“motion to amend”) and appendix (Dkt. 62), and the City’s amended response in opposition and appendix (Dkt. 67). Arbor Court did not reply to the City’s response in opposition to Arbor Court’s motion to amend.

         Having considered the motions, responses, and applicable law, the court finds that Arbor Court’s motion to amend (Dkt. 61) should be DENIED as futile because the takings claims it seeks to reintroduce are unripe, and the City’s motion to dismiss (Dkt. 26) should be GRANTED because (1) Arbor Court’s other federal constitutional claims are also unripe; (2) the court declines to exercise jurisdiction over Arbor Court’s supplemental state law claims pursuant to 28 U.S.C. § 1367(c)(3); and (3) Arbor Court’s request for injunctive relief must be dismissed because all of the underlying claims fail to survive the motion.

         I. Background

         A. Factual Background

         Arbor Court is a 15-building, 232 unit, multi-family apartment community located at 802 Seminar Drive in Houston, Texas. Dkt. 22 ¶ 15; Dkt. 61-1 ¶ 17. The community operates as a Section 8 housing property through a Housing Assistance Payment (“HAP”) contract with the United States Department of Housing and Urban Development (“HUD”). Dkt. 22 ¶¶ 5, 27; Dkt. 61-1 ¶ 3. Arbor Court’s first-floor units were damaged from flooding as a result of Hurricane Harvey in August of 2017, causing some of Arbor Court’s residents to be displaced. Dkt. 22 ¶ 1; Dkt. 61-1 ¶ 2. The parties agree that Arbor Court “is subject to the City’s municipal ordinances” (Dkt. 22 ¶ 15; Dkt. 61-1 ¶ 17), including Houston’s Floodplain Ordinance (Dkt. 26 at 2). See Houston, Tex. Rev. Ordinances, ch. 19.[1] The parties agree that the Floodplain Ordinance requires Arbor Court to apply for repair permits, and that Arbor Court did in fact apply for permits to repair damage sustained during Hurricane Harvey. Dkt. 22 ¶ 2; Dkt. 26 at 2; Dkt. 61-1 ¶ 4.

         On October 10, 2017, the City’s Floodplain Management Office (“FMO”) found that each of Arbor Court’s buildings had been “substantially damaged” pursuant to FEMA cost estimation guidelines. Dkt. 22 ¶ 19; Dkt. 61-1 ¶ 21. Arbor Court “used the FMO’s ‘Substantial Damage Determination Appeal’ (‘SDDA’) form” to appeal the substantial damage determination. Dkt. 22 ¶ 20; Dkt. 61-1 ¶ 22. On March 28, 2018, Arbor Court was notified by letter that its SDDA had been successful for seven of the fifteen buildings. Dkt. 22 ¶ 21; Dkt. 61-1 ¶ 23.[2] This letter stated that “the hold that had been placed in the City of Houston building permit system on your address has been removed, ” and that “[i]f you have not already done so, you may now proceed with obtaining any City of Houston permits you need to complete the repairs.” Dkt. 26-1 at 1–2. Arbor Court “continued to protest the City’s substantial damage determination for the remaining eight Arbor Court buildings, ” and was notified via email on May 1, 2018, that “all buildings will be classified as non-substantial.” Dkt. 22 ¶ 22; Dkt. 61-1 ¶ 24. At some unspecified later point in time, “Arbor Court learned that the City was requiring either the Mayor’s Office or Director of Public Works for the City to approve the issuance and release of any permits.” Dkt. 22 ¶ 23; see also Dkt. 61-1 ¶ 26.

         On July 17, 2018, the City notified Arbor Court via letter that it had “concluded that Arbor Court’s requests for permits should be denied” because the City Engineer had “concluded that there is danger to both life and property due to flooding in the vicinity of the site.” Dkt. 26-3; Dkt 67-1 at App. 09–10.[3]

         On October 9, 2018, an unspecified person from “the City called Arbor Court stating that it had eight approved permits that Arbor Court needed to pick up or the City would cancel them out of the system.” Dkt. 22 ¶ 25; see also Dkt. 61-1 ¶ 29. “On October 16, 2018, Arbor Court went to retrieve those permits.” Dkt. 22 ¶ 25; see also Dkt. 61-1 ¶ 29. Upon arrival, an unspecified person from “the City stated that the permits would not be released without supervisor approval.” Dkt. 22 ¶ 25; Dkt. 61-1 ¶ 29. Arbor Court “returned the next day to seek such supervisor approval, and it was denied, as the supervisor confirmed the City would never release any permits to Arbor Court.” Dkt. 22 ¶ 25; see also Dkt. 61-1 ¶ 29.

         To date, Arbor Court has never received any permits. Dkt. 31 at 4. Yet throughout this time period, “the City has provided permits to similarly situated apartment complexes that allowed them to rebuild, ” and the “only material difference between those complexes and Arbor Court is that Arbor Court is a Section 8 property, and those complexes are not.” Dkt. 22 ¶ 26; see also Dkt. 61-1 ¶ 30.

         B. Procedural Background

         On June 8, 2018, Arbor Court filed suit against the City alleging four causes of action: a takings claim, a due process claim, a Section 1983 claim, and a request for injunctive relief. See Dkt. 1. The City moved to dismiss on July 16, 2018. See Dkt. 7. That motion was mooted on October 1, 2018, when Arbor Court filed its first amended complaint, alleging the same causes of action, but notifying the court of a related case against Arbor Court: Jackson et al v. U.S. Dep’t of Hous. & Urban Dev. et al, Civil Action No. H-18-2468 (S.D. Tex.). See Dkt. 14. The City moved to dismiss the first amended complaint on October 15, 2018. See Dkt. 16. On October 16, 2018, the court issued its scheduling order, setting the deadline for amended pleadings as October 31, 2018. Dkt. 17. On October 31, 2018, the City’s second motion to dismiss was mooted when Arbor Court again amended its complaint. See Dkt. 22. In its second amended complaint, Arbor Court dropped its takings claim and added constitutional claims for violations of procedural and substantive due process, equal protection, and the Contracts Clause of the U.S. Constitution, in addition to new state law claims for violations of substantive due process and equal protection, tortious interference, and violation of vested rights. See Id . Arbor Court retained its Section 1983 claim and request for injunctive relief. See Id . The City moved to dismiss the second amended complaint on November 14, 2018. See Dkt. 26. On June 27, 2019, Arbor Court moved for leave to file its third amended complaint, seeking to update facts and reinsert the takings claim it dropped from its second amended complaint. Dkt. 61 at 2. On July 23, 2019, deadlines in this case were stayed pending a ruling in Civil Action H-18-2468. Dkt. 68. On August 15, 2019, Arbor Court was dismissed from Jackson. See Civil Action No. H-18-2468, slip op. at 1 (S.D. Tex. Aug. 15, 2019) (granting plaintiff’s motion to dismiss Arbor Court as a defendant). This court now considers on the pending motions (Dkt. 26; Dkt. 61).

         II. Ripeness

         Ripeness questions pervade both motions, and the court must consider jurisdictional attacks before attacks on the merits. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).

         With regard to the motion to amend (Dkt. 61), the City argues that the takings claim that Arbor Court seeks to reintroduce to this litigation is not ripe because Arbor Court has not pursued any formal appeals, meaning that it is without a final decision-a prerequisite to a ripe takings claim. Dkt. 67 ¶¶ 21–25. In support of this argument, the City has attached various evidentiary materials, including the July 17, 2018 denial letter, which informed Arbor Court of the “process to apply for a variance, ” or its right to “appeal the denial of permits to the General Appeals Board.” Dkt. 67-1 at App. 09. Arbor Court contends that there are no ...


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